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News/Business. (2012) Kathleen Hall Jamieson, Annenberg Public Policy Center; Marty Kaplan, Norman Lear Center; Neil Barofsky talks about banking reform. (CC) (Stereo)




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Romney 19, New York 8, Washington 7, Us 7, America 6, Goldman Sachs 5, Kathleen 3, Neil Barofsky 3, Kathleen Hall Jamieson 3, Paul Ryan 3, U.s. 3, Mitt Romney 2, Cnn 2, Paulson 2, Joe Biden 2, Marty Kaplan 2, Ba 1, Iso 1, Tha Yllou 1, Nbc 1,
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  PBS    Moyers Company    News/Business.  (2012) Kathleen Hall Jamieson, Annenberg  
   Public Policy Center; Marty Kaplan, Norman Lear Center; Neil...  

    October 26, 2012
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welcome. time now for some reality checks. we've waited until all four debates were over so we could see them more holistically than we would one by one. so with a little more than a week before november 6th, i've asked t astute observers, a widely recognized for casting a keen and discerning eye on what we journalists often miss, to sum up how they think the debates and the campaigns have r not. democracy we won't rehash who won or lost. ultimately each of you has to make that call. we want instead to ask what we a did odid not learn about the pickle our country's in, and how the candidates think we can get out. kathleen hall jamieson is a t regular and familiar participant on our broadcast. expert on debates, media, and political rhetoric. director of the annenberg public policy center at the university of pennsylvania, she has been a force behind two essential, non-partisan websites,
11:03pm and, each calling out the deception and confusion generated by parties and partisans. on the other side of the continent, her fellow annenberger marty kaplan is founder and head the norman lear center at the university of southern california's annenberg school for communication and eaurnalism. the center focus on the bustling intersection of show business and politics.e he's been a producer and screenwriter as well as a speechwriter for then vice president walter mondale and a colleague of the late u.s. commissioner of education ernest boyer. welcome to you both. >> thank you. >> thank you. >> kathleen, the last time you were here you said all we've got left in the search for truth and knowledge is the debate. all right, are you satisfied now? >> no, we did not get an answer to the question that i wanted answered, which is "what are the sacrifices you're going to ask of us?no where are you going to get the mon that weweeed in a way thatee
won't tank the economy, that will incease the likelihood of economic growth?" and so, the problem now facing a the country and the candidates is we're going to elect a candidate who is going to govern by asking us to make choices that we haven't anticipated. and as a result, we're going to feel betrayed to some extent, even if we voted for that ndidate. >> the debates were the most watched in a long time. your field intersects politics and entertainment. do you think entertainment e.values had something to do wi this? >> well, i think sus ense was what was required down to the wire. s and that's what we got. one won one, another won another. then a coue of draws. what could be better for keepie people watching? unfortunately, the lack of an e answer to who sacrifices what is only the beginning of an endless list that, for me, is reason , to be disappointed, not just in the debates, but in the entire campaign. i want to find out about things that are important, about plutocracy taking over
democracy, the widening gulf between the powerful and the powerless. wall street, global warming, on and on. at most, ty made a cameo t, appearance during the debate. and i think they were trivialized by the context. and usually, entirely absent. so i was disappointed overall in the complete lack of attention to some of the most important issues that the nation is facing. > and one of the things that is problematic is when we don't talk about it, we sometimes don't address it as result. the absence of a discussion about climate change is one of those categories. we spent a lot of time talking about where we were going to get energy. r but we didn't talk about how we were going to regulate the uses of the energy and the getting of the energy. and we didn't talk about the effects of the ways we would get it on either the environment or, more broadlyon the globe. g >> nonetheless, did the debates matter? do you think they've had an impact on the campaign?
>> yes, a what we, what we saw weross the debates is what we expected to see. we saw learning about those issues that weraddressed. more accurate placemenadof candemdates on the areas in whih they differ. whaowe didn't see is more accurate placement on areas that they're similar because the news never stresses areas in which they're similar. but nonethweess, we've seen learning across the debates in our annenberg survey. when t my sense is tha there is no penalty for lying or as jonathan swift says in the last part of "gulliver's", for saying the thing that is not soh that the things one learns about what people say are completely irrelevant. governor romney has chang his position on just about everything throughout his entire career. and that, i believe, bedevils the fact checkers who hall say, "well, his official position is this, but then he did that.wh so it's hard to know, but you can't really say, this is true because also that's true." if that's the context, if that's what's going on, then i'm not
sure what can be learned at all about governor romney because the ances of him saying something different, doing something different once the election comes, based on his behavior during this campaign and while he's been running anr president, are extremely high. >> let me give you an example o what people have learned. people know that governor romney is going to increase spending for the military. and that's a consequential difference. they know that president obama is going to increase taxes, where, where governor romney is not if he's elected presint. that's an important issue distinctiont coming into the last debate, the annenberg survey showed that the public thought that governor ct romney was more likely to take the country into a war, than was president obama. but the public also believed that president obama had gone around the world apologizing. now in the last debate, governor romney reassured that he was not as likely to take people into war as they had thought in that debate. and i think that was a calculated strategy on his part.
now, you could say, "and it was illegitimate. you secretly know that he was more likely." but nonetheless, what we can measure is whether they get what he said he was going to do in the context. and i think that president obama responded to the apologizing around the world claim in a i mber of ways that were effective as well. and i think one of the things that we can say about debas making a difference is that, had there been debat in the i ldwater/johnson election, had there been debates in the mcgovern/nixon election, i think we would not have had the blowout landslides that we had. what debates do is take the caricaturing of the challenger and give the challenger a chance to snd there and be who the re challenger would like to be in front of that audience. i think for governor romney the benefit was he knocked down some of the caricature that had been built of him. and i tnk he reassured people, even who may vote against him, that he is not as extreme and re reckless as some of the obama advertising and statemts would make him out to be. >> see, i would say that he didt not knock down the caricature. he deepened the caricature because his problem is that he will say and do anything, and
there is zero accountability for it. so going into this debate, he had to prove that he was not the person that he was in the republican primaries. but simply by saying different things, doesn't make him genuinely be anything else different. he's simply recalibrating what he thinks he needs to pander to undecided voters. >> what i learned is that governor romney an abler and more intelligent public figure than he came across in the ne republican primaries in the spring. and that he had to dumb himself down so much back in the spring in order to appease rush limbaugh, ralph reed, grover norquist. >> you so let him off the hook. and i don't know why you do that. i feel as though that's wt the's media's frame for dealing with the primaries is. "well, we all know that you have to appeal to the party's base in the primaries, and then you have to move to the center bause er that's just something that people have to do."
why do we let people do that as that dance was acceptable in a democratic society. >> oh no, i don't think you have to move to the center. i'm only saying he chose to go that route in order -- because he thought he coulhaonly get the nomination that way. >> but why didn't you hold him accountable, not for just realizing that he haetto do it tactically, but that that is a really corrupt thing to do. inappropriate and disqualifying for leadership, as opposed to it's just what politicians have to be up to. isn't it sad, he's a niit guy. >> candidates do change positions. qud the question is when is it consequential and when isn't ito and when does it become a behavioral pattern that means you can draw an inference d about what the person is going to do when the person's going to govern? one of the questions that the electorate has the opportunity to ask in debates is precisely that question because you have two different factors holding the candidate accountable. you have the questioning moderator and you have the other candidate. and in the head to head comparisons, if a candidate is
vulnerable to the charge, if the candidate has changed positions a lot on consequential matters, you're going to have questions about it and you're going to have the opposing candidate make the argument. and then electorate then has to ask, "what do i make of this? who do i think the person is? what do i think the person is actually going to do?" but they have more evidence than they would have in the absence of debates, and that's the value of debates. >> but look at the way it pla out. romney will say, "yes, i do have a deficit plan. go look on my website. it's there. it's true." which puts the burden on the audience. i wish they would go to your website because they won't find out the answer at mitt romney's website. >> b then we come to the we second part of the process that protects. you heard in the debates candidates saying, "that's not true. check the record. heck the transcript," and an invitation essentially to go to the fact checkers and journalism. to the extent that this year he e've had a lot of fact checking in nationad journalism, a lot more than we've had in previous years. aland we know now after the fir three debates. last time i talked to you it
was, it was only a hypothesis, that the people who said they went to the fact checking sites or went to journalism for fact checking on the web, were more likely to accurately be able to portray the candidates' positions and those exchanges in which somebody was alleging deception. romney, his plan largely doesn't add obama did not apologize around the world, if by apologize you mean said, "i'm sorry and i apologize." what we haven't gotten to is a deeper understanding of what obama was doing in those moments. i think he was doing something extremely important that we have not talked about, which is recalibrating our relationship to the rest of the world so thal we would work collegially with allies in order to increase the likelihood that we were all on the same page when we moved, sometimes militarily, sometimes with sanctions. >> the debates, as both of you know, are agreed to by the press on the terms set by the two parties through the presideial commission on debates. so, i think what we're getting are staged press conferences. not debates in the sense that you mean them when you wrote utur first book about tiam in politics.
these are not debates in that sense, are they? >> no, they're not. and they're-- i suspect that if we tried to back to debates b that sense, we would have trouble holding public attention. in a world in which public attention span is being abbreviated daily, the likelihooi think that you'd i get people to watch an hour long presentation on one side with an hou long response is probably approaching zero. >> yes, mr. lincoln, you can go on your website and tell us what you think about slavery, right? >> but you've seen montage after montage of, for example, mitt romney's position on hen u u see the montage, t it's so clear that he has many positions. and you can do a timeline along with it and, and make the relationship between his bid for higher office to it. why can't a debate inclu the playing of such a clip and then say, "mr. romney, please respont to that," as opposed to the formality even of a conventional press conference in which somee is free to you can dk a question. it's much harder to duck evidence and a >> but the parties and the
candidates will not agree to that, unless you have it on their terms. >> which is why i am more e dispirited, i think, than kathleen is because what you do get, even from this limited, signed on kabuki does still have some value, despite its limitations. i completely agree. >> but on abortion, here's what i think we can reasonably say reading history. what candidates say they will do in the general election of a presintial campaign and what e they repeatedly say they're going to do does predict what they're going to try to do, regardless of what they've done in their past or what they've said in the past. i would predict that if governor romney elected president, he ne would support, nominate justices who would be more likely to overturn roe v. wade than would barack obama. i thi that it is itear, however, that he would not do anything to outlaw abortion in cases of rape, incest or li i of the mother being endangered. i think we know that from the exchanges to date. and so you cr say he's had more
positions across time, and his position -- you can mark different points in the calendar across his life. >> i do think that the public, by and large, perceives the fac' that he has made more 180 degree turns than a whirling dervish. i read this comment online at "the washington post," a reader who said that, "romney has thrown limbaugh, rick perry, allen west and all the other tea party people under a freight train by essentially saying he would govern as president obama governs." that's what he, in effect, he said this past last debate. what about that? >> why would anyone beeve that?e yes, he said that and yes he did it to convey the impression that the old mitt romney from the primaries was just something he had to do to appease his tea party base. why should you now believe that, if he gets elected, he will not be a psoner of the eric a cantors and, and the john boehners?
and the right -- extreme right wing of his party that will force him to do stuff as present that he now says he's not going to do because hats in a general election campaign? a person who doesn't have a core, it strikes me, is susceptible to the same kind of pressure once in office, as when he was running to appeal to his base in the first place. >> but there isn underlying e tendency here that's recognizable. bara obama opposed a mandate in order to distinguish himself from hillary clinton. he has a mandate in his affordable care act. there's always some movement toward the center in governance, as well as a move toward the center toward the general election because of the nature of the two party system a the nature of divided governance. >> i'm not sure i would call what happened in the last couple of years a movement toward the center. i thi of it as obama negotiating with himself with an intransigent right which used a its power to hold the country hostage, rather than finding
common ground. >> so, let's talk about what you did and didn't learn. you've watched the four debates now. do you have any idea of how governor romney would manage to cut income tax rates by 20% o without increasing the deficit? or which tax deductions he would eliminate? or specifically, how he's goin to create the 12 million jobs he's promised? or what barack obama's going to do in his second term? do you have any sense of that? >> well, in the case the 12 million jobs, as we know, you don't have to do anything and you'll get 12 million jobs. any number of economists and moody's analytics have pr ticted that simply by keeping present policies in place, 12 million jobs will be created over that period. so it's not much of a boast. as for the tax policy, my guess is that he doesn't know and he c is just saying things. he has said he wants to cut taxes -- rates by 20%. and i believe he does and would
but when you ask him why that won't be a $5 trillion increase in the deficit, he says -- and i love the third person, "if mittd romney says there won't be an increase in the deficit, there won't be. that's why and how." >> i know how he could, because some of the studies he cites make assumptions that would let him beco revenue neutral. he could take the major deductions away from everyone making more than $100,000. r that would effectively do it according to one of the studies. he could also eliminate the tax free status, the tax free municipabonds. now that would pose a real problem for municipalities. but he could. in other words, there are ways to get but not under the assumptions that he offers in his plan. i think -- >> involvingard choices and sacrifices, which you've talked about every time you've been on the show. >> but there's a second thing. we've been distracted by the discussion, how would he get to revenue neutrality?ar tyd as a result, not asked, how's he going to address the deficit because he has no revenue on the table if he gets
to revenue neutrality. all he's done is not increase the deficitore than we already have.or we should be focusing on, how do we address the deficit we already have, not worrying about whether he gets to revenue neutrality. obama wants us to worry about is he going to blow the deficit up even more. >> kathleen, what we the big whoppers? where did they cross thehebie? >> the incumbent always overestimates how much the incumbent has accomplished. and so, president obama wants to suggest thathere have been more jobs created in net than there have actually been created because t wants us to feel better about the economy than the data would actually warrant. governor romney wants to feature everything that's negative, without acknowledging anything u that's positive about the economy. and if people feature one of those indictments without picking up the other compensatory body of information, they don't have the whole picture. the reality is the economic indicators rit now are mixed. and you have a new obama ad on the air that's trying to feature the ones s hat are positive in order to increase the likelihood that you think about those as
you ask whether or not the country is better off now than a itwould've been, had obama not been president. we were in a deep recession. and president obama's having the difficulty of having to make the argument that, "things are ve better than they would have been, had i not done what i have done." but they're still not what they ought to be. and that's a tough case for the incumbent. and governor romney's exploiting it every inch of the way. >> my favorite whopper was when paul ryan said that the reason that they don't want to say how they will change the loopholes is because they'll be attacked. people will say mean things about them. and that democrats and republicans won't be able to work together. "joe biden is partisan but i, paul ryan, know what real bipartisanship is all about." this from the most ruthless, relentless, disciplined right wing unified front that i believe the nation has ever seen. this is the person who is
saying, "bipartisanship is what we're all about. and you democrats don't understand what that means." >> yeah, but there's, there's one other thing. sometimes you sin by omission. and when the candidates suggest that their plans are going to be sufficient to address the crisis the deficit facing debt crisis that we're facing, in an environment which we can't afford to tank the economy, they are implying something that's fundamentally false, given what they've told us. president obama is telling us how he's goingcio get some extra revenue by tax incrsoses. but he's not going to get enough that way. and he hasn't specified the spending cuts. and governor romney's numbers don't work out either. in you've got both implying that my plan is sufficient, when in fact neither is sufficient. and that's the problem. whmy they translate that into governance, if they just do exactly what they promised they're going do, we are in a real crisis. and lo term, our country's got serious and unresolved problems. >> the voter out there only has a choice, therefore, between two
insufficient possibilities.d >> but they do know that governor romney will cut more and obama will tax more. that's a certain inference. >> on your point, i was surprised that when paul ryan se said what he did to joe biden tha you know, "we can work ygether." and when romney runs, romney has a new ad out saying he can work better with congress than obama has, that somebody didn't point out that this is an obstructionist republican majority in the house. >> i think that's because obama is in a trap. he has painted himself into a corner, which makes him vulnerable to the charge, which has been heard increasingly ofte that you don't know what obama's going to do in his second term, that he doesn't have an agenda, that only the past he's willing to talk aboutf that was a failure. and he can't tell you because it's not going to be good. i think the probm obama has is that he can tell part of the story, thanks to bill clinton,
which is, "they ge me a e problem and i stopped what they were doing. now you d't want to give it 't back to the people who caused the problem." but what he is not then able to do, which i wish he would do, is to say, "and the reason it was so hard for me to do as much as i wanted, and the reon i need your help, america, going eerward, is that these people are going to fight us tooth and nail every step of the way. and starting with dealing with this fiscal cliff in wh h there's this terrible sequester tal, thoh people are holding the country hostage. i'm going to go to you, the country, and ask you to pressure your representatives, including the republicans, to make a deal, find common grounnwith us. and that's what it's going be like in the future." obama has not made a convincing. case that the way in which the non-part -- the way in which the bitter partisanship of the past would be different from the future.
why wouldn't mitch mcconnell and john boehner be even more vicious toward himn the future, and ferociously so than they have been n the past? >> president obama and speaker boehner came very close to a deal that had both revenue and cuts on the table. t in the first debate, we had kind of an ironic moment in which governor romney was both confirming that he would not put new revenue on the table and saying that he was going to be bipartisan and get a solutn.n. you can't sit down with the democrats and say, "i'm going to be bipartisan," and not offer ything. what the republicans have to offer is revenue. and what the democrats have to offer is spending cuts. and in that grand bargain which fell apart because neither could appease their own base effectively, they had both cuts and revenue on the table. that's where we're going to have to go for a solution. my worry is the country doesn't k w that's what's going to happen. >> kathleen, how would your experience differ if you had watched on nbc, fox, pbs, cnn? did it make a difference whw h
network you were watching? >> yes, the networks at held rk much of the debate in split screen invited you to see the debate through the reaction of the candidate who wasn't speaking. >> anyou think that's significant?yo >> i think it's significant because it minimizes the likelihood that you're hearing what's beingaid. and it'trying to create an interpretive frame in which, if someone is effective nonverbally, they can undercut the position of the other persot without ever engaging in a rebuttal. you also saw on cnn, a running commentary line indicatingow men and women -- >> those squiggly lines? >> yes. >> the worm. >> how men and women -- >> the worm. >> in some undefined space were reacting. and that invites you to say, "why am i deviating so much from the women whose lines are being tracked? why is it that men and women are diverging?" and in the meantime, you're not hearing what's being said. if debates are our most powerful vehicle for learning and we create structures that distract from that, we're not doing a service. and there's one more. people watching debates rently, lyhey're watching
debates on social media about -- >> yeae this was a big year for twitter. >> it's a huge year for social t media, including twitter. and whathat means is we had about two-thirds of the electorate, two thirds of the adult pothlation watching at least one debate. and about 20% of those watched while they were engaging in some form of social media. we have very tentative evidence that suggests that when you reported doing that, and we put all the controls in place, so t education and age, all the things that might affect knowledge, your level of knowledge about the debates drops. that is, your ability make accurate distinctions drops -- >> how do you explain that? >> explain it because you're in fact being distracted. we all think we multitask well. and the best research says that we --it >> no longer. >> actually don't. >> i don't. >> and so, to the extent that you are focusing on something first, that commentary stream is framing things for you. so you're now seeing through someone else's lens or you're trying to create your own lens if you're the one who's tweeting, instead of engaging in the content. but secondly, you're being distracted from the content. so as you're reacting, you're not processing useful information.
we have fundamentally, in this new social media environment, changed the way in which a discernible part of he population is absorbing content. and they're not getting as much out of the debates, we suspect, as they might otherwise. what are they learning? t big bird, binders and bayonet. one, two, three. >> but consider the possibility that through social media, theyr are actually geing useful additional information. for example, during the fourth dey te when mitt romney monstrated that there was no at difference between him and president obama on any issue, bill maher tweeted, "the same as the other guy, only i'm white," as a summary for what mitt romney's position is. and it struck me as a brilliant, concise description of how race is an undertone in this election. and that going to romney is a safer choice for people who, at some level, have been made
uncomfortable byhis president.hi that would never have been an element of the onscreen debate. arguably, it's, it's an irrelevancy to what was going on. but i would contend that it's entirlyy relevant to the conduc of the entire campaign. >> what do you think have been their main sengths and weaknesses? >> romney's main strength in the debates has been that he has appeared in the debates with a consistency of message and in demeanor that suggests that the person who would be the commander in chief does not appear temperamentally to be the reckless person that the obama campaign would make him out to be. and i think as a result, the strength in governor romney was dispatching the caricature that was created very effectively by the democratic ads. and also, undercutting to some extent, the democratic inference that he was more likely to take the country into war. >> what do you think is his major strength?
>> he'll say anything. so whatever the situation, he will be delighted to give an answer which gets him through that moment and appeals to whatever group he's talking to. at best, the 47% comment was an attempt to pander to that audience and not revealing behind closed doors who he really is. >> and what were obama's weaknesses throughout the debates? >> that he was unable to talk about how he would deal with what torpedoed him in his first term, which was the bitter partisanship. which meant that no matter what he putorward, how good, how useful, how popular evenorith the country, that it would nevev go anywhere because that was the policy of the opposition, to stop everything dead in his track, to turn the filibuster into a day to day procedure of the senate, as opposed to the kind ofhings d ere you, you er
know, you break the glass during an emergency. >> obama s the advantage that al gore ultimately had in 2000 on the complex issue of what are the implications of s reducing the marginal tax rates by 20% and osing undisclosed loopholes. throughout the three major president debates, obama has driven the argument, you can't do it.n first you have to tell us what the secret plan is. if it were desirable, you'd be disclosing it. so it's probably not so desirable. but secondly, you can't accomplish what youate proposing on the assumptions that you're offering witho exploding the deficit or hurting the middle tass. if on ection dayeceople ask, "does that really add up?" the vote is far more likely to be a vote for obama. >> kathleen hall jamieson, marty kaplan, let's continue this conversation online. thanks for being with me. >> tha yllou, bieo. >> you're welcome., >> and now for another reality check -- a far cry from the humbug and rhetorical stic
afflicting our election campaigns. let's talk about something president obama and governor romney barely mentioned in their debates -- banking reform. it's four years since the economic ltdown knocked america and the world to our knees, four years since that massive taxpayer bailout. but if you listened to the mindidates, the enormity and severity of this continuing crisis hardly merit notice. barack obama pledges change but touts dodd-frank, a bulky, watered-down version of financial reform that scarcely makes a ripple in the vast sea of corruption and abuse. mitt romney campaigns as the f banker's pal and says he'll make dodd- frank disappear altogether. if you're appalled by this, so is the man who held the thankless job of special inspector general in arge of i policing tarp, the bailt's troubled asset ren.ef pla before he signed on, neil p barofsky was a federal prosecutor in new york chasing
white-collar criminals and dr d lords. he busted 50 members of a columbian guerrilla group deeply involved in narcotics trafficking. at tarp, he was assigned to ferret out waste, fraud and abuse. the banks didn't make it easy, and neither did the u.s. government. neil barofsky tells this story in his book, "bailout: an inside account of how washington abandoned main street while rescuing wall street." he is now a senior fellow and adjunct professor at the new york university school of law. neil barofsky, welcome. >> thank you. >> when you were a kid, did you say, "mom, dad, i want to grow up and be an inspector general?" >> no, i said i wanted to be a lawyer, though. >> you did? >> it must be some sort of major genetic flaw i have. but my mom keeps a fortune cookie that said, "you will be a great lawyer one day." and i signed it and dated it. i thini was 12 years old.12 so there was something weird about me that i wanted to be a lawyer.
i wanted to be a prosecutor. i mean, that was sort of what i wanted to do. maybe it's from watching tv shows, "perry mason," as a kid or something like that. but i was always drawn to the law. and so i think i did have this drive for public service. but certainly never did think that i'd be an inspector general one day. i didn't rlly even know what ll that was until i actually got at the job, to be honest with you. >> when you took the job, i read about you. and i thought, "why is someone like that, with that record of prosecution going to take on this job at this -- in the depth of this crisis?" >> part of it was because this new ofce, this office of the ce special inspector general for tarp, with the worst acronym in washington. >> it really is. >> sigtarp, was to have two focuses. one was the oversight functio and doing reports and audits and keeping an eye on treasury and making recommendations.ct but what i was more focused on in the beginning and what i thought my job would be is we also created a brand-new law enforcement agency, completely from scratch, whose job was to police the tarp program. and with $700 billion going out
the door, the idea was that, inevitably, there were going ton be criminal flies drawn to that honey. and our job was to catch them, do the investigations, and then get the department of justice to prosecute them. so i really looked at this job going in as a law enforcement job. and i was thrilled with the opportunity to build one from scratch. but once i got down there -- >> early 2008, wasn't it? 2008? >> i arrived in december 15, 2008. and the money started going out the door in late october of 2008. and what i saw was that there were tremendous opportunities for abuse. there were no conditions, nore strings attached and conflicts interest being baked into some of the so i, doing what my job was as a former fraud prosecutor started pointing these out and making suggestions, rommendations to try to close these loopholes and make it less vulnerable to and the response i got was remarkably eye-openg to i was told that maybe my concerns were valid. but i didn't need to worry about
it, becse these were banks. and these banks would never, i remember this quote, "risk theie reputation by putting their owne profits over the public purpose behind these programs." and to be very clear, this was told to me by paulson people under the bush administration and the same exact words were told to me by the geithner people under the obama administration. but it was a remarkable thing to hear. because who could really believe that other than people who had come from these institutions. and my response, of course, is "where have you been for the last couple of years? what rock have you been under, that you haven't seen that these guys would sell their soul for a few basis points of guofit?" that ideas like they wouldn't risk their reputations or wouldn't embarrass themselves again, as bill dudley, the president of the new york fed said to me when i complained about relyi too heavily on credit-rating agencies. this was the core ideology and approach of how they viewed the financial crisis. it wasn't the bank's fault. and if we could just trust them, we'll be in a good place again.a
>> and yet, there haven't been prosecutions have there, of these -- the people culpable for this crash? >> no, mean, what our office did was to detect, prosecute, investigate, and refer for prosecution those who tried to steal from the program. so we were blocked out of any activities that occurred before tarp. because we were -- our jurisdiction was limited to tarp. and we had great i think close to a hundred people, so far, have been charged for trying to rip of this program. we saved more than $500,000,000 of tarp money in just one investigation alone. and the ceo who committed a multibillion dollar accounting fraud is now sitting in jail for 30 years. but we never had the opportunity, really, to dig into the financial crisis cases that led to the cause of the crisis. but there you are absolutely correct. no senior executive has been held accountae under the criminal laws. >> why? >> there's no easy answer. and it depends on who you ask.
so if you were to talk to someone from the department of justice or wall street they would tell you these are very complex issues.r the president has mentioned that a lot of times it might be caused by greed or stupidity or avarice but not necessarily by criminal conduct. if you were to talk to people on the other side, they would say we just have a hopelessly corrupt criminal justice system. i think the truth is a little bit more nuanced and a little bit in between. what i saw personally was a real timidity on behalf of the department of justice. and a lack of sophistication and expertise, when looking at the complex accouing fraud cases that i was doing. and i think it's safe to presume that that also applied over there to the crisis-related cases.c but you also have to look into the reality behind what those cases would mean. we just spent trillions of dollars of treasure, taxpayer money, an unbelievable amount of effort to save these financial institutions, save them from failure, because we believed that the failure of any one of
those would bring down the entire economic system with it. they were too big to fail in 2008. they were too big to jail in 2009. >> i thought, at the time, this was an incestuous orgy going on there, between inside players at washington and inside players at walstreet. is that too strong? >> it's probably not too strong. it's the fact that their ideology matches up.t. and look, one of the reasons why their ideology matches up is they all come from the same small handful of institutions. and the people i was dealing with on a daily basis came from the same financial institutions that helped cause the financial crisis and were the most generous recipients of bailouts, goldman sachs, bear sterns, which, of course, had been adopted by j.p. morgan chase. goldman sachs, goldman sachs, it seemed like every time i turned around, i bumped into someone from goldman sachs. which is not to single them out. but they all bring that ideology with them, when they come to whington. it's not like somebody hits them in the head witha magic wand
and they give back everything that they've learned and a believed in their yearof wall street.of and they bring that ideology with them. and even those who don't come from a specific bank, when u surround yourself, create an echo chamber of likeminded people, it's not terribly surprising that the government policy lookhea lot like what thi wall street institutions themselves would have most desired. and i think the oth side effect of th o is that people who are outside of that bubble, people who don't have that background, people like myself as a federal prosecutor or elizabeth warren, who f as he he chair of the congressional oversight panel and before that a harvard professor, that our views, our criticisms, our contrary positions were discounted, mocked, ridiculed, insulted, cursed at, at times. because there was no -- we didn't have the pedigree in their world to have a meaningful contribution. so what happens is that there's no new ideas that creep in. and you get this very uniform, very non-diverse approach to the
problems of finance. >> it was puzzling to outsiders like me that you had tarp money being used to concentrate further the size of these banks. >> and the granddaddy of all those transactions, bank of america acquiring merrill lynch. and the important thing to remember here is this is not banks gone wild, banks taking the money and saying, "party time, we're going to consolidate." they did this with the encouragement of the government. and in bank of america, a little bit with a gun to the head to complete that transaction. this was the government policy created by the architects, ben bernanke who is chair of federal reserve, tim geithner, who was then the president of the new york fed before becoming treasur secretary, and hank their solution originally was to further concentrate the industry, to make the too big to fail banks bigger. the theory was you take a healthier bank and mix it up with a failing bank and you ge something somewhere in between, which is better overall for the system. which may have had some validity in the very, very short term, but has put us on a path, i
believe, to being even more dangerous. because you have institutions now that are just motrous in size, over $2 trillion in assets by cet ain measury , close to $4 trillion by other measures. terrifying. the idea that any of these as e stitutions could ever allowed to fail is pure fantasy, at this point. >> are you suggesting that we could have anoth crash? >> i think it's inevnoable. i mean, i don't think how you can loin at all the incentives a that were in place going up to 2008 and see th in many ways they've only gotten worse and come to any other conclusion. >> what do you mean incentives nyin place? >> so in a normal functioning capitalist utopia, where, you i know, most markets are that don't have this too big to fail, this presumption of government bailout if a firm like a citigroup amasses massive amounts of risk. and in so doing, they keep razor-thin capital to absorb
potentialosses, which basically meant they're just re borrowing tons and tons of money. and not have a lot of their own money at stake, but it's mostly borrowed money. and it is very opaque. it's not very transparent about how they're runng their business.g you would expect that creditors, people lending them money, counterparties, those on the other sides of their transactions would either stay away or really exact a premium. but the presumption of bailout changes that on its head and actually makes it go in the other direction. so it removes the incentive of the other market participants to impose what's known as market distcipline. because that's ideally in a ci capitalist society what happens is that the lenders and creditors and counterparties say, "he we're not going to do business with you unless you clean house, slim down, be more transparent." but when there's a presumption " of bailout, that disappears. because all those other market players can feel safe in the presumption that if anything goes bad at citigroup, uncle sam is going to come in and make
their bets whole. then you have the very real incentive for the executives at that institution to then pile on risk. because they know that if the bets go well in the short term, they get paid. and they get paid very richly. but if it blows up and theisks go bad, no worry, the taxpayer's going to be on the other side of that bill. that's what happened to fannie mae and freddie mac, before they collapsed. that's what happened to our biggest banks and global banks before they collapsed. and if you maintain that system, it is foolhardy to think that those incentives and pressures are not oe again going to carry the dae >> at a conference a week or so ago, here in new york, you said playing ball for wall street has become a normal way of life, despite the panic of 2008. what does it mean, "playing ball for wall street"?e >> well, what i saw when i was in washington was this reals pressure on myself, on other regulators to essentially keep their tone down.
and i was told point blank by re assistant secretary of the treasury that, this is about i 2010. and he said to me, hsaid, "neil, you're a smartsauy. you're a young guy. you're a taleuyed guy. you got your whole future in front of you.. you've got a young family that's starting out. but you're doing yourself real har." and the reason why you're doing yourself real harm is the harsh tone that i had towards the government as well as to wall street, based on what i was seeing d."n in washington. d and he told me that if i wanted to get a job out on the street afterwards, it was going to really be hard for me. >> you mean on wall street? >> yes, and i explained to him that i wasn't really interested in that. and he said, "well, maybe a judgeship. maybe an appointment from the obama administration for a federal judgeship." and i said, "well, again, that would be great. but i don't really think that's going to happen with my
criticisms." and he said it didn't have to be that way. "i all you do is soften your tone, be a little bit more upbeat, all this stuff can dppen for you." and that's whaori mean wby playbyg ball.g i was essentially told, "play ball, soften your tone, and all of these good things can happen to you. but if you stay harsh that was going to cause me real harm," in those words. >> what me you able to say no to the temptation?e >> well, i think part of it is the only job i ever wanted was to be a federal prosecutor. >> send bad guys to jail? >> it doesn't get much better than that. really interesting, complicated work, and wear the white hat. so i didn't have those inntives that i think that were presented. and i think, look, you know, being trained in the u.s. attorney's office for the southern district of new york, i was trained to be a government employee and to take my oath of office very seriously. but i wasn't really interested in their reindeer games. and i felt a real obligation and sense of duty to fulfill the oath that i took in secretary paulson's office on december 15, 2008, to do the job that i was
sent down there to do. but i wasn't really tempted with a big job on wall street. and frankly, if it meant getting a judgeship, compromising the job that i needed to do and was supposed to do, it just wasn't interesting to me. but look, let me be very clear. i also have the fallback of i was a trial lawyer. i prosecuted a lot of big cases. and i knew that whatever happened, could always go b ak and get a good job in new york, working at a law firm or doing legal work. so it gave me a degree of financial freedom even though io basically spent most of my career as a government employee and i didn't have money. i didn't necessarily need to ba please anyone to be able to go back and still be able to feed my family. >> what happens to a political society, to a democracy, when we stifle or bribe or shoot the sheriff? had mi incident with y the assistant secretary that my deputy, who had come down from -- who's another former
federal prosecutor, who did narcotics work, said to me, kevin puvalowski. and he said to me, "neil, you were just offered the bullet o the bribe, the gold or the lead." and what he was referring to was a society jt like that, which was colombia, back in the day when pablo escobar and the drug kingpins really cot rolled society. and what he was referring to iso that basically tcorrupt t society escobar would go to a magisate or a police officer, police chief, a politician, and say, "you have two choices. you can either take this giant pile of money and do my biddingg or you can get the lead, a bullet in your head." and kevin was joking that i just received the washington white collar equivalent of the gold or the ld. and it was funny, at the time, but that's kind of what happens in a socety where the rewards and incentives are, again, er nbody's getting shot in the head thank goodness. but it's a breakdown of the system. and in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are
built into the system are b operational, when in fact they're not. and what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions. and you'll see governments that continue to have policies that feed the interests of -- and i don't want to get cliched, but the one percent or the .1% -- to the detriment of everyone else. >> you make it clear in the book that the obama administration fought against cutting down the size of these banks. and yet, in the second debate with mitt romney the president said, "we passed the toughest wall street reform since the gre depression." as i hear you, it wasn't all that tough. >> well, that's a literally true statement. because when you think of -- but it's a very low bar to clear. i mean, all of the regulatory d eat rm since the depression has been peeling back on those regulations. with really the big death knell
happening in the end of the clinton administration with, you know, a couple of bills, one that removed the last veiges of the separation between commercial and investment banks. >> glass-steagall act? >> glass-steagall.t >> it took down the wall between those two? >> the last part of it. and then the second part by passing a bill that made it, essentially made derivatives out of bounds for regulation. so saying that it's the toughest is literally true. the problem is it hasn't been tough enough in where it most matters. and again, you don't really have to take my word for it. you just look what the market has done. based on the presumptioof of bailout, the banks get higher ratings from the credit rating agencies which means they can borrow money for less, because their debt is viewed by the credit rating agencies as being less risky. and they get these highe ratings on explicit presumption that the government will bai bthem out and make good on the debt. so it didn't deliver the goods where it matters the most. again, not saying that it tesn't have some good positive things for our system and r people. but itidn't deliver the most de important thing that we need if
we want to address the causes of the last crisis and help prevent the next one. >> what will it take to preve the next one >> got to break them up. i mean, it is not a simple thing toccomplish, necessarily. but it's a very simple solution. and what you see, i think, kind of amazingly, is how many more people have come to this view over the last year or it used to be a lonely perch that we sat on. former special inspector generals, a couple of academics. but now you have people like sandy weill, the architect of citigrou and sure, too little too late, after he made all of his money off creating these frankenstein monsters. but even he now recognizes that we have to break up the banks. you have senior officials at the federal reserve recently coming out in favor of this, the vice chair of the fdic, a very strong advocate for breaking up the banks. and you hear it a lot more in an members of congress that are supporting this notion. so to me, on the one hand, it's absolutely essential. if we really want to get to the point where we don't have to
bailout a bank, we have to make it so that no bank is so systemically significant and large that its failure could bring down the system. >> are they up to their old tricks? >> the banks? sure. i mean, you know, so we had this regulatory reform of dodd-frank in 2010, which, you know, left them intact and inside. but it had all of these rules and all of these regulations that needed to follow. and right now it is hand to hand, trench warfare, combat with those lobbyists spending all that money on campaign contributions, on, you know, flooding the decision makers and the regulators with comment letters and endless meetings. and pressuring members of congress to put pressure on the regulators, to water down the rules, to basically get as much back to the good old days where they would have free reign to print money, take advantage of their too big to fail status, bully and pushut the little guys, ta l advantage of consumers. and that's what all of these ta efforts area about are to preserve these very, very core profit streams that they had
before. and that's right now is w re the barele is being waged.le not on tv, you know, not necessarily out in front, but behind the scenes where the next set of rules are being forged on what they're going to be able to do and how they're going to be able to do it. >> what are you hearing in the campaign about all this? >> well, there's sort of two levels, right? there's the campaign rhetoric, which i think you just have to ignore. i mean, president obama, for example, campaigned on this whole policy of nlobbyists. that he was going to take on these lobbyists when he came into office. that was in in january 2009, do you know who ey made as the chief of staff for treasury department?ey former chief lobbyist for goldman sachs, mark patterson. so like, so you've got to look beyond what they're saying. and what they're saying is things like they're both, 100%, totally convinced that they would never bailout a bank ever again. and barack obama ss he won't s do it because the dodd-frank mechanisms would work. mitt romney is a little bit more
mysterious. he says he would remove the regulatory reform and replace it with something else. but that he too would never bail out the banks again. which again, sounds great, and i'm sure if you were to ask president bush -- any time up until september of 2008, he would just as passionately tell you that he would never dream of bailing out the banks either. but that's not realistic. if we're in a crisis, they're going to do exactly what they did in 2008. so you look twhat are their policies? how are they going to accomplish that goal? and neither one really offers os anything. romney literally doesn't offer anything. we have no idea what his policies are. we don't know what that replacement is. but we do know, we hear him from interviews and some of his chief advisors, you know, say things like, against breaking uthe banks through bringing back some of those depression era laws orh again one of his advisors recently said that he's against having size caps, which is another way of breaking up the banks. ory the way, two policies that are absolutely 100% identical with those of president obama
and his advisors. so neither one really has a very clear path forward to achieve that goal of making it so that 's not necessary to bailout banks once again. >> is it too late 's reverse course? >> no, it's not too late. my sincere hope is that we get r it done before the next financial crisis, because i think that the next one, given how big the banks have become and frankly how much less room we have because of the fiscal al crisis, of dealing with the giant financial, that it'll be more devastating. i hope we can do it before then. but frankly, the end game for real reform has to unfortunately be in thebftermath of the next t crisis. >> in the meantime, i he everyone reads "bailout: an inside account of how washington abandoned main e reet while rescuing wall street." neil barofsky, thank you very much for being with me. >> thank you for having me. >> that's all for this
at our website,, both conversations continue, with kathleen hall jamieson and marty kaplan and with neil barofsky. and in a web onlynterview, my colleague laura flanders talks with scholar, activist, and nt author peter dreier about california's controversial proposition 32 and peter's new book on progressives who have made a difference. that's at i'll see you there and i'll see that's at i'll see you there and i'll see you here, next time. -- captions by vitac -- don't wait a week to get more miers. visit this episode of "moyers & company" is available on dvd.
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